- 10 -
Cir. 1972), affg. T.C. Memo. 1970-335, or, if the totality of the
evidence conveys a different impression, see Diamond Bros. Co. v.
Commissioner, 322 F.2d 725, 731 (3d Cir. 1963), affg. T.C. Memo.
1962-132; Gerald D. Roberts Consultants, Inc. v. Commissioner,
T.C. Memo. 1991-490, affd. without published opinion 981 F.2d
1251 (4th Cir. 1992); Houston v. Commissioner, T.C. Memo. 1983-
635.
Advances to Petitioner
Whether the advances from Mayflower and Jordan to
petitioners were taxable distributions, as respondent contends,
or loans, as petitioners contend, depends on whether repayment of
the amounts was intended by petitioners and Mayflower and Jordan
at the time that the amounts were advanced. Notwithstanding the
formality of executing notes from petitioners to the
corporations, the other facts and circumstances surrounding the
advances may negate the intent to create a bona fide debt. See
Estate of Chism v. Commissioner, 322 F.2d 956 (9th Cir. 1963),
affg. T.C. Memo. 1962-6; Diamond Bros. Co. v. Commissioner, supra
at 731; Clark v. Commissioner, 266 F.2d 698, 710-711 (9th Cir.
1959), affg. in part and remanding on another issue T.C. Memo.
1957-129. In view of petitioner’s unfettered control over
Mayflower and Jordan, special scrutiny of the circumstances is
required. Electric & Neon, Inc. v. Commissioner, 56 T.C. 1324,
1338-1339 (1971), affd. without published opinion 496 F.2d 876
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